Raising S.F. minimum wage: tread cautiously

Updated 5:39 pm, Monday, February 17, 2014

One of the surest crowd pleasers for a politician - at least in the Bay Area - is to propose an increase in the minimum wage. San Francisco has the nation's highest, at $10.74 an hour, and momentum is building to ask voters this fall to increase it to up to $15.

It's hard to imagine any increase getting rejected at the ballot box, especially with rising concern about income inequality. Mayor Ed Lee said the $15 level was "worth evaluating."

This is an issue where elected officials must tread cautiously.

The potential for unintended consequences was driven home in a recent editorial board meeting with owners of small businesses. These are not the companies that are putting spaceship-size buses on the streets or minting millionaires with stock options. These are the shops and services and restaurants that operate with a human touch - and often on a tight profit margin.

They also are the employers that are willing to give opportunities and training to people with limited job skills.

They emphasized that the $10.74 minimum wage should not be viewed in isolation. The reality of the city's job market, even at the entry level, is that it would be hard to fill a job at the minimum rate.

What concerns them is the ripple effect that might not be readily apparent to someone who does not run a business. An elevated hourly wage also raises payroll taxes and workers compensation insurance costs. A big jump in the minimum wage to $15 would lead employees already at or slightly above that rate to expect raises as well. Small businesses also point out San Francisco's health care and sick-leave mandates add to the cost of building a workforce.

Those businesses also see the effects of a higher minimum wage built into the prices they pay for goods and services from other businesses.

None of this is to suggest the minimum wage is unnecessary. It is not only a proper safeguard against exploitation of workers, it serves the taxpayers' interest as well. There is something very wrong about government indirectly subsidizing companies whose wages are so low that workers qualify for an array of poverty programs.

The challenge is to find the sweet spot where low-income workers get a lift without poisoning the business microclimates that incubate opportunity and neighborhood vitality.

The mayor has pledged to give the issue a thorough vetting to take all perspectives into account. It will not be easy to hold back the call for $15, but the final figure should be supported by comprehensive analysis, not driven by politics or emotion.

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